U.S. patent number 4,975,840 [Application Number 07/208,067] was granted by the patent office on 1990-12-04 for method and apparatus for evaluating a potentially insurable risk.
This patent grant is currently assigned to Lincoln National Risk Management, Inc.. Invention is credited to Arthur W. DeTore, David W. Jones, Jr., Russell D. Suever.
United States Patent |
4,975,840 |
DeTore , et al. |
December 4, 1990 |
Method and apparatus for evaluating a potentially insurable
risk
Abstract
A method and apparatus for evaluating the insurability of a
potentially insurable risk has data bases for storing information,
and the ability to correlate selected elements of information in
respective data bases. Certain elements are assigned weights on the
basis of predetermined relationships existing between elements of
information in one data base and corresponding elements of
information in another. Information is displayed from a data base
for use by an underwriter in assigning a weight to a selected
element, or an expert module corresponding to the selected element
is identified and used for assigning the weight. A risk
classification is determined for the potentially insurable risk
from the weights assigned. The system can identify additional
elements of information required for evaluating the potentially
insurable risk, and can request entry of such information for
subsequent storage. In one embodiment, the system can identify an
element of information for which no corresponding information
exists, and for which no expert module exists. Other features
include the ability to override an expert module and assign a
different weight to an element of information, the use of
statistical profiles to adjust assigned weights, the ability to
determine expected profitably resulting from decisions concerning a
particular risk, and the provision of additional data bases useful
in managing workload and customizing operation of the system.
Inventors: |
DeTore; Arthur W. (Fort Wayne,
IN), Suever; Russell D. (Fort Wayne, IN), Jones, Jr.;
David W. (Fort Wayne, IN) |
Assignee: |
Lincoln National Risk Management,
Inc. (Fort Wayne, IN)
|
Family
ID: |
22773043 |
Appl.
No.: |
07/208,067 |
Filed: |
June 17, 1988 |
Current U.S.
Class: |
705/4;
706/924 |
Current CPC
Class: |
G06Q
40/02 (20130101); G16H 50/30 (20180101); G06Q
10/10 (20130101); G06Q 40/08 (20130101); Y10S
706/924 (20130101) |
Current International
Class: |
G06Q
40/00 (20060101); G06F 015/40 (); G06F
015/21 () |
Field of
Search: |
;364/401,408,513 |
References Cited
[Referenced By]
U.S. Patent Documents
Other References
Other Documents: Non-Confidential Exhibits 1-5 Confidential
Exhibits 6-14..
|
Primary Examiner: Smith; Jerry
Assistant Examiner: Tbui; Kimthanh
Attorney, Agent or Firm: Barnes & Thornburg
Claims
What is claimed is:
1. Information processing apparatus for evaluating the insurability
of a potentially insurable risk, comprising:
a. means providing first and second data bases, an input device and
a display;
b. means for storing information relating to the potentially
insurable risk in the first data base;
c. automated means for evaluating the information stored in the
first data base and for identifying additional elements of
information required for evaluating the potentially insurable risk,
and for requesting entry of said additional information for
subsequent storage in the first data base;
d. means for correlating selected elements of information from the
first data base with corresponding elements of information
previously stored in the second data base;
e. means for assigning a weight to at least one of the selected
elements of information from the first data base on the basis of
predetermined relationships existing between the elements of
information in the first data base and corresponding elements of
information in the second data base;
f. means for displaying information from the second data base,
corresponding to at least one of the selected elements of
information from the first data base, for use in assigning a weight
to said element of information, means for monitoring an input
device for entry of said weight, and means for storing said weight
following entry thereof; and
g. means for determining at least one risk classification for the
potentially insurable risk from the weights assigned to the
elements of information in the first data base.
2. Information processing apparatus according to claim 1, further
comprising a plurality of expert modules, means for identifying an
expert module corresponding to an element of information from the
first data base for use in assigning a weight to said element of
information, means for monitoring the input device for entry of
said weight, and means for storing said weight following entry
thereof.
3. Information processing apparatus according to claim 2, further
comprising means for identifying an element of information in the
first data base for which no corresponding information in the
second data base exists and for which no expert module exists, and
for selectively providing an option to assign a weight to said
element of information.
4. Information processing apparatus according to claim 2, further
comprising means for overriding the expert module, and for
assigning a different weight to the corresponding element of
information from the first data base.
5. Information processing apparatus according to claim 2, further
comprising means for storing at least one statistical profile
relating to a selected element of information from the first data
base, and means for adjusting the weight assigned to at least one
of said elements of information on the basis of said statistical
profile.
6. Information processing apparatus according to claim 2, wherein
said means for determining at least one risk classification
includes means for combining the weights assigned to the elements
of information in the first data base to derive a single weight
representative of the potentially insurable risk.
7. Information processing apparatus according to claim 6, further
comprising means for comparing the single weight representative of
the potentially insurable risk to a standard for a risk of the same
class.
8. Information processing apparatus according to claim 7, further
comprising plan conversion means for determining the risk
classification of the potentially insurable risk on the basis of
the comparison of the single weight to the standard.
9. Information processing apparatus according to claim 2, further
comprising means for quantitatively determining an expected profit
resulting from a decision concerning the insurability of the
potentially insurable risk according to the previously determined
risk classification.
10. Information processing apparatus according to claim 9, further
comprising means for storing information, including statistical
data from previous transactions of a similar type, relating to the
decision, means for determining a probability of generating the
expected profit on the basis of said information, and means for
further evaluating the expected profit in view of said
probability.
11. Information processing apparatus according to claim 9, further
comprising means for selectively changing the risk classification
and for determining the impact of the change on the expected
profit.
12. Information processing apparatus according to claim 1, further
comprising:
means providing a user data base;
means for storing information relating to a plurality of apparatus
users in the user data base;
means for selecting one of said plurality of users on the basis of
information stored in the user data base; and
means for identifying the potentially insurable risk to be
evaluated with the selected user.
13. Information processing apparatus according to claim 12, wherein
said information stored in the user data base includes information
relating to at least one of:
a level of training of selected user;
a level of experience of a selected user;
a workload of a selected user; and
at least one of a plurality of marketing factors.
14. Information processing apparatus according to claim 1, further
comprising:
means providing an installation specific data base;
means for storing installation specific information relating to the
potentially insurable risk in the installation specific data
base;
means for correlating selected elements of information in the first
data base with corresponding elements of information in the
installation specific data base; and
means for assigning weights to said elements of information in the
first data base on the basis of the information stored in the
installation specific data base.
15. Information processing apparatus according to claim 1, further
comprising:
means providing a management information data base; and
means for storing information relating to determination of the risk
classification for the potentially insurable risk in the management
information data base.
16. Information processing apparatus according to claim 1, further
comprising:
means for displaying selected elements of information from the
first data base;
means for monitoring an input device for changes and additions to
the information in the first data base entered in response to the
display; and
means for storing said changes and additions in the first data
base.
17. Information processing apparatus according to claim 1, wherein
said means for displaying information from the second data base
includes:
means for determining if the identified element of information from
the first data base is mentioned in the second data base;
means for classifying the identified element of information into
one of a plurality of categories;
means for identifying elements of information from the second data
base which correspond to the category into which the identified
element of information from the first data base has been
classified;
means for determining a most appropriate match between the
identified element of information and the elements of information
from the second data base which correspond to the category in which
the identified element of information from the first data base has
been classified; and
means for displaying said matching elements of information from the
second data base for use in assigning a weight to the identified
element of information from the first data base.
18. Information processing apparatus according to claim 1, wherein
said means for storing information relating to the potentially
insurable risk in the first data base, and said automated means for
evaluating the information stored in the first data base and
identifying additional elements of information required for
evaluating the potentially insurable risk comprise a
non-interactive portion of the apparatus; and, wherein said means
for displaying information from the second data base for use in
assigning a weight to an element of information, said means for
monitoring an input device for entry of said weight, and said means
for storing said weight following entry thereof comprise an
interactive portion of the apparatus.
19. Information processing apparatus according to claim 18, wherein
said non-interactive portion of the apparatus further comprises
means for assigning a weight to at least one of the selected
elements of information from the first data base on the basis of
predetermined relationships existing between the elements of
information in the first data base and corresponding elements of
information in the second data base.
20. Information processing apparatus according to claim 18, wherein
said information processing apparatus further comprises a user data
base, and wherein the non-interactive portion of the apparatus
further comprises means for selecting one of a plurality of users
from the user data base, and identifying the potentially insurable
risk to be evaluated with the selected user.
21. Information processing apparatus according to claim 19, wherein
the interactive portion of the apparatus further comprises means
for providing the selected user with an option to do at least one
of the following:
(a) examine or update the information in the first data base;
(b) review the information stored in the second data base; and
(c) proceed with the evaluation of the potentially insurable
risk.
22. In an information processing apparatus having first and second
data bases, an input device, and a display, a method for evaluating
the insurability of a potentially insurable risk, comprising the
steps of:
a. storing information relating to the potentially insurable risk
in the first data base;
b. evaluating the information stored in the first data base by
automated means to identify additional elements of information,
based on said evaluation, required for evaluating the potentially
insurable risk, and requesting entry of said additional information
for subsequent storage in the first data base;
c. correlating selected elements of information from the first data
base with corresponding elements of information previously stored
in the second data base;
d. assigning a weight to at least one of the selected elements of
information from the first data base on the basis of predetermined
relationships existing between the elements of information in the
first data base and corresponding elements of information in the
second data base;
e. displaying information from the second data base, corresponding
to at least one of the selected elements of information from the
first data base, for use in assigning a weight to said element of
information, monitoring an input device for entry of said weight,
and storing said weight following entry thereof; and
f. means for determining at least one risk classification for the
potentially insurable risk from the weights assigned to the
elements of information in the first data base.
23. The method of claim 22, wherein the information processing
apparatus further comprises a plurality of expert modules, and
wherein the method further comprises identifying an expert module
corresponding to an element of information from the first data base
for use in assigning a weight to said element of information,
monitoring the input device for entry of said weight, and storing
said weight following entry thereof.
24. The method of claim 23, comprising the additional step of
identifying an element of information in the first data base for
which no corresponding information in the second data base exists
and for which no expert module exists, and selectively providing an
option to assign a weight to said element of information.
25. The method of claim 23, comprising the additional step of
overriding the identified expert module and assigning a different
weight to the corresponding element of information from the first
data base.
26. The method of claim 23, comprising the additional steps of
storing at least one statistical profile relating to a selected
element of information from the first data base, and adjusting one
or more of the weights assigned to the elements of information from
the first data base on the basis of said statistical profile.
27. The method of claim 23, wherein said step of determining at
least one risk classification includes combining the weights
assigned to the elements of information in the first data base to
derive a single weight representative of the potentially insurable
risk.
28. The method of claim 27, comprising the additional step of
comparing the single weight representative of the potentially
insurable risk to a standard for a risk of the same class.
29. The method of claim 28, comprising the additional step of
determining the risk classification of the potentially insurable
risk by comparing the single weight to the standard.
30. The method of claim 23, comprising the additional step of
quantitatively determining an expected profit resulting from a
decision concerning the insurability of the potentially insurable
risk according to the previously determined risk
classification.
31. The method of claim 30, comprising the additional steps of
storing information, including statistical data from previous
transactions of a similar type, relating to the decision,
determining a probability of generating the expected profit on the
basis of said information, and further evaluating the expected
profit in view of said probability.
32. The method of claim 30, comprising the additional step of
selectively changing the risk classification and determining the
impact of the change on the expected profit.
33. The method of claim 23, wherein said information processing
apparatus further comprises a user data base, and wherein the
method comprises the additional steps of:
storing information relating to a plurality of apparatus users in
the user data base;
selecting one of said plurality of users on the basis of
information stored in the user data base; and
identifying the potentially insurable risk to be evaluated with the
selected user.
34. The method of claim 33, wherein said information stored in the
user data base includes information relating to at least one
of:
a level of training of a selected user;
a level of experience of a selected user;
a workload of a selected user; and
at least one of a plurality of marketing factors.
35. The method of claim 23, wherein said information processing
apparatus further comprises an installation specific data base, and
wherein the method comprises the additional steps of:
storing installation specific information relating to the
potentially insurable risk in the installation specific data
base;
correlating selected elements of information in the first data base
with corresponding elements of information in the installation
specific data base; and
assigning weights to said elements of information in the first data
base on the basis of the information stored in the installation
specific data base.
36. The method of claim 23, wherein the information processing
apparatus further comprises a management information data base, and
wherein the method comprises the additional step of storing
information relating to determination of the risk classification
for the potentially insurable risk in the management information
data base.
37. The method of claim 23, comprising the additional steps of:
displaying selected elements of information from the first data
base;
monitoring an input device for any changes and additions to the
information in the first data base entered in response to the
display; and
storing said changes and additions in the first data base.
38. The method of claim 23, wherein said step of displaying
information from the second data base includes:
determining if the identified element of information from the first
data base is mentioned in the said data base;
classifying the identified element of information into one of a
plurality of categories;
identifying elements of information from the second data base which
correspond to the category into which the identified element of
information from the first data base has been classified;
determining a most appropriate match between the identified element
of information and the elements of information from the second data
base which correspond to the category in which the identified
element of information from the first data base has been
classified; and
means for displaying said matching elements of information from the
second data base for use in assigning a weight to the identified
element of information from the first data base.
39. The method of claim 22, wherein said method comprises:
a non-interactive mode including at least the steps of storing
information relating to the potentially insurable risk in the first
data base, and evaluating the information stored in the first data
base to identify additional elements of information required for
evaluating the potentially insurable risk, and requesting entry of
such information for subsequent storage in the first data base;
and
an interactive mode including at least the steps of displaying
information from the second data base, corresponding to at least
one of the selected elements of information from the first data
base, for use in assigning a weight to said element of information,
monitoring an input device for entry of said weight, and storing
said weight following entry thereof.
40. The method of claim 39, wherein said non-interactive mode
further includes the step of assigning a weight to at least one of
the selected elements of information from the first data base on
the basis of predetermined relationships existing between the
elements of information in the first data base and corresponding
elements of information in the second data base.
41. The method of claim 39, wherein said information processing
apparatus further comprises a user data base, and wherein the
non-interactive mode of the method comprises the additional steps
of selecting one of a plurality of users from the user data base,
and identifying the potentially insurable risk to be evaluated with
the selected user.
42. The method of claim 41, wherein the interactive mode of the
method comprises the additional step of providing the selected user
with an option, upon entry to the interactive mode, to do at least
one of the following:
(a) examine or update the information in the first data base;
(b) review the information stored in the second data base; and
(c) proceed with the evaluation of the potentially insurable risk.
Description
BACKGROUND AND SUMMARY OF THE INVENTION
This invention relates to information processing apparatus and
methods for evaluating the insurability of a potentially insurable
risk.
Risk has been defined as the possibility of loss or injury. It is
an element of every day life that cannot be avoided. Possible
losses can take many forms, including: loss of life, health,
property, or finances. Because it is not known when a particular
loss will occur, and because the consequences of such loss can be
very severe, people have learned to try to protect themselves from
risks. Although there are several ways to do this, insurance is
perhaps the most common. Insurance is designed to protect people
and property from potential losses or injury. However, not all
risks are insurable. For a risk to be insurable, the element of
chance must be present, i.e., the loss should be caused by an
uncertain future event which is not intentionally caused. The
ability to evaluate the elements of chance and probability in
determining the insurability of a potentially insurable risk is a
complex process. In the past, individuals have assessed these risks
from their own experiences supported by the accumulated experiences
of the group with whom they work. Such individuals have been called
underwriters, since they are willing to accept or underwrite a
particular risk.
Today, there are many types of potentially insurable risks. Lives
and health are at risk from infections, accidents, cancers, stress,
heart disease, and other causes. Property is at risk from
environmental sources such as fires and storms as well as from
accidents, theft and vandalism. Further, protection from legal
liability is an important and emerging issue. As society has
changed, and the nature and number of potential losses have
increased, the task of evaluating the insurability of potentially
insurable risks has become more complex and demanding, and
typically involves the review of more information than in the past.
Due to these factors, and the variations in the abilities of
individuals to assess the chance elements and probabilities
associated with risks, and the financial consequences of poor
decisions, there exists a need for improving the overall processes
of evaluating risks by increasing access to information as well as
coordinating and processing information from multiple sources. A
need also exists for improving the manner in which the management
of large organizations involved in the evaluation of risk (such as
large insurance companies) implement policies concerning such
evaluations.
An object of the present invention is to provide a method and
apparatus for evaluating the insurability of a potentially
insurable risk in an improved and more consistent manner.
This and other objects are attained in information processing
methods and apparatus which provide first and second data bases;
means for storing information relating to the subject risk in the
first data base; means for identifying additional elements of
information required for evaluating the risk, and means for
requesting entry of the additional information for storage in the
first data base; means for correlating elements of information from
the first data base with corresponding elements of information in
the second data base; means for assigning a weight to one of the
selected elements of information from the first data base on the
basis of predetermined relationships existing between information
in the first data base and corresponding information in the second
data base; means for displaying information from the second data
base, corresponding to one of the selected elements of information
from the first data base, for use in assigning a weight to that
element of information, means for monitoring an input device for
entry of the weight, and means for storing the weight following
entry thereof; and means for determining a risk classification from
the weights assigned to the elements of information in the first
data base. In preferred embodiments, the methods and apparatus of
the present invention further include a plurality of expert
modules, and means for identifying an expert module corresponding
to an element of information in the first data base for use in
assigning a weight to that element of information. Provisions are
also made for identifying elements of information in the first data
base for which no corresponding information in the second data base
exists and for which no expert module exists, and for selectively
providing an option to assign a weight to such elements.
Other aspects of the present invention, which may also be
incorporated into embodiments of the invention, include the ability
to override the expert modules and to assign a different weight to
the element of information, and to adjust the assigned weights on
the basis of statistical profiles relating to the subject
information.
In certain embodiments of the invention, the risk classification is
determined by combining the weights assigned to the elements of
information in the first data base to derive a single weight
representative of the subject risk. This single weight is then
compared to a standard for a risk of the same class, and a
conversion is performed to arrive at the proper risk
classification. The method and apparatus of the present invention
preferably allows for determination of an expected profit which may
result from a decision based on the risk classification,
determination of the probability of generating such a profit, and
the impact on the expected profit of changing the risk
classification.
Certain embodiments of the methods and apparatus of the present
invention include a user data base, an installation specific data
base, and a management information data base. The user data base is
useful for storing information relating to a plurality of system
users, and for selecting one of the users for subsequent
identification with the potentially insurable risk to be evaluated.
Users are selected on the basis of training, experience, workload,
and any of a number of marketing factors. The installation specific
data base is used for storing information which may be specific or
peculiar to a particular site, geographical location, marketing
group, or other designated category, and for factoring such
specific information into the assigning of weights to the elements
of information in the first data base. The management information
data base allows the method and apparatus of the present invention
to be monitored and modified, as deemed appropriate.
Other objects, advantages and novel features of the present
invention will become apparent from the following detailed
description of the invention when considered in conjunction with
the accompanying drawings.
BRIEF DESCRIPTION OF THE DRAWINGS
FIG. 1 shows a block diagram of a generalized computer system
suitable for use in practicing the present invention.
FIG. 2 shows a block diagram which illustrates the logical
organization of the underwriting knowledge base as used in a
preferred embodiment of the invention which relates to evaluating
risks associated with life insurance.
FIG. 3 shows a flow chart which illustrates data collection, entry,
and screening, and initial underwriting features of the present
invention.
FIG. 4 shows a flow chart which illustrates the complex
underwriting feature of the present invention.
FIG. 5 shows a flow chart which illustrates the process of
preparing for underwriting in the system of the present
invention.
FIG. 6 shows a flow chart which illustrates the underwriting
process of the present invention in additional detail.
FIG. 7 shows a flow chart which illustrates the business analysis
feature of the present invention in additional detail.
FIGS. 8-10 show flow charts which illustrate the workings of an
exemplary expert module in the form of an expert system, of the
type used in conjunction with the present invention.
FIGS. 11-12 show decision trees which illustrate the use of
decision analysis techniques in the system of the present
invention.
DETAILED DESCRIPTION OF THE DRAWINGS
Before discussing the preferred embodiment of the invention which
is described and illustrated in FIGS. 1-12, it should be noted
that, although the invention will be discussed in terms of its
applicability to the evaluation of risks inherent in underwriting
life insurance, the broader aspects of the invention are not
necessarily limited to this particular application. Although the
preferred embodiment of the invention described below does offer
particular advantages in the field of life and health insurance, it
is felt that adaptation and application of the invention to other
fields, such as the underwriting of property and casualty insurance
risks, will also be advantageous. Accordingly, the scope of the
invention is not intended to be limited by the details of the
preferred embodiment discussed below, but rather by the terms of
the claims following this detailed description. It should also be
noted that, although terms of art such as "underwrite,"
"underwriter," "policy," etc. are used throughout the following
discussion, these terms are not intended to unduly limit the
applicability of the system of the present invention. For example,
although a life insurance "underwriter" (as defined by today's
industry standards) will most surely benefit from the system
described below, it is likely that others not presently designated
as "underwriters" will be able to use and benefit from the
invention and, accordingly, may be considered "underwriters" for
purposes of this application.
FIG. 1 shows a generalized computer system suitable for use in
practicing the present invention. The system includes a terminal 10
and a memory unit 12. Terminal 10 comprises a central processing
unit (CPU) 14, an input device 16 which may, for example, be a
keyboard, and a display 18 which may be a standard cathode ray tube
monitor Memory 12 may be constructed integrally with terminal 10
or, alternatively, may be located remotely from terminal 10 and
accessed via telephone or other communication lines. Computers
suitable for use in practicing this invention include personal
computers (such as an IBM Personal System-2, Model 80), other
micro-computers, mini-computers, mainframe computers, or networks
or combinations of any of the above.
For purposes of this discussion, memory 12 can be visualized as
being divided into a number of data bases, knowledge bases and
files, as illustrated. In practice, these divisions may be
reflected in the physical structure of memory 12 by providing a
plurality of separate memory devices corresponding to the divisions
illustrated. Alternatively, a single memory device containing all
the stored information necessary for practice of the invention may
be used. In the discussion which follows, the data bases, knowledge
base, and file illustrated in FIG. 1 will be discussed as separate
entities by way of example and illustration only.
Memory 12 includes application data base 20, installation specific
data base 22, underwriting knowledge base 24, underwriter file 26
and management information data base 28. Application data base 20
contains all information collected from the applicant or
applicants, including personal data (age, address, occupation,
avocations, income level, etc.), medical information (prior medical
problems, existing conditions, medications, etc.), and any other
information received from the applicant which may have a bearing on
insurability. In addition, application data base 20 may contain the
results of medical tests and examinations, inspection reports,
medical histories, and other information provided by third parties
bearing on the question of insurability of the applicant.
Installation specific data base 22 contains rules, guidelines,
procedures, and other information for use in evaluating the
information in data base 20 which are specific to a particular
company, location, or site. Although many of the rules and much of
the information used in evaluating risks tend to be generic in
their application, the existence of data base 22 does provide for
some degree of customization of the system. Information in data
base 22 may be modified as necessary or desired to allow for a
degree of product differentiation in the underwriting process.
Files of installation specific variables within data base 22 which
may be subject to modification include, but are not limited to, age
and amount limits for ordering examinations, levels for inspection
reports, and levels for blood test workups. These variables are set
at the time of system installation, and may be modified at any time
to reflect changes in product design or the offering of new
products.
Underwriting knowledge base 24 is the information base that drives
the system. It incorporates the copyrighted information contained
in the underwriting manuals used by the assignee of the present
invention. Underwriting knowledge base 24 is divided into textual
elements that describe the underwriting process, factual elements
on specific medical conditions or impairments impacting upon
mortality, and programmed knowledge, in the form of expert modules,
which expertly direct the system user through the underwriting
process for selected problems or impairments. Examples of the
information related to specific impairments (e.g., blood
pressure--hypertension and build) which are included in knowledge
base 24 are attached to this specification as Appendix A. An
example of the programmed knowledge base, or expert modules, which
are included in knowledge base 24 is illustrated in FIGS. 8-10
which are discussed in detail below.
The programmed knowledge base is interwoven with the textual
information so as to allow the text to be used to provide
explanations for the programmed decisions reached by the expert
modules. It should be noted that the term "expert module", as used
in this application, includes the type of deductive programming
illustrated in FIGS. 8-10 and commonly referred to as an expert
system. However, the term "expert module" is not intended to be
limited to this particular type of programming or technique of
analysis. An expert module may include a regression analysis, a
discriminate function, loglinear analysis, linear programming, or
any other technique which may be used by experts in analyzing and
evaluating the risks associated with a particular problem or
situation.
Underwriting knowledge base 24 is logically organized as
illustrated in FIG. 2. Underwriting knowledge base 24 includes, on
a first "branch" 30, information on each major body system and
various medical impairments associated therewith. Branch 30 further
includes a programmed knowledge base which includes one or more
expert modules relating to medical conditions (e.g., asthma) which
are used in analyzing information provided from application data
base 20, installation specific data base 22, or other parts of
memory 12. Branch 32 includes non-medical text material explaining
the underwriting approach used in connection with non-medical
impairments (e.g., avocations, such as mountain climbing), along
with the associated expert modules (see, for example, FIGS. 8-10).
Branch 34 includes information relating to financial
considerations, and the expert modules associated therewith. Branch
36 includes additional underwriting reference materials (e.g.,
laboratory values, abbreviations, a dictionary of medical terms,
etc.) in readily available form for the user.
For purposes of this discussion, the term "problem" will generally
mean an element of information (e.g., facts and conditions such as
age, a medical condition, a hazardous avocation, a smoking or
drinking habit, etc.) stored in application data base 20 which
impacts either positively or negatively upon the relative mortality
of the proposed insured. The term "impairment" will generally mean
an element of information (e.g., the impacts of aging, various
medical conditions, avocations, smoking, drinking, etc. on the
mortality of known populations) stored in underwriting knowledge
base 24 which relates to or corresponds with the information
contained in application data base 20. Each impairment is
associated with textual information and/or an expert system or
module which is intended to assist the system operator in
quantifying the impact of a particular problem (by reference to a
corresponding impairment) upon expected mortality in a particular
instance. In broad terms, the approach to evaluating or
underwriting a given risk which is incorporated into the process of
the present invention includes the following steps:
1. Identifying a problem from the information contained in
application data base 20;
2. Matching or correlating the identified problem with a
corresponding impairment from underwriting data base 24;
3. Assigning weights (i.e., debits or credits) to the identified
problems on the basis of information contained in the underwriting
data base; and
4. Determining a risk classification for the given risk by
combining the assigned weights.
As will be seen from the discussion which follows, the system of
the present invention is capable of completing this process without
the aid or intervention of skilled underwriters or other personnel
in some cases and, in more difficult cases, is helpful in improving
the efficiency, quality, and consistency of decisions which do
require input from skilled underwriters.
Referring again to FIG. 2, the system of the present invention
allows the user to reference any of the textual material contained
in underwriting knowledge base 24 in a non-underwriting mode (i.e.,
the underwriter need not be underwriting a case to reference the
material). The programmed knowledge bases, or expert modules, can
be executed in a non-underwriting mode as well. With a minimum
amount of input data, a test case may be processed through
execution of the expert modules. This non-underwriting mode of
referencing the system is especially useful in training or
"what-if" modes of system operation.
Memory 12 also includes underwriter file 26. File 26 includes
background information on available underwriters, including level
of experience or skill, geographical location, current workload,
and other factors which might influence the assignment of cases to
a particular underwriter. Memory 12 further includes management
information data base 28. Data base 28 stores information relating
to usage of the system of the present invention, including
information relating to the number of cases evaluated by system
users, the time required to evaluate each case, and other items of
information from which determinations as to the effective uses of
the system can be reached. This feature of the invention is
discussed in further detail below.
FIGS. 3-7 show flow charts which illustrate the basic operation of
the system of the present invention. Referring specifically to FIG.
3, block 40 represents the initial step of data collection, entry,
and screening. In this step, a basic amount of data on each case is
collected and simple screening is performed, preferably
concurrently with data collection. Data may be collected by having
an applicant complete an application form, with the information
subsequently entered into the system by a keyboard operator.
Alternatively, an applicant, or an applicant's agent or
representative, may enter information directly from a keyboard or
other input device. It is specifically contemplated that, at this
stage of the process, a skilled underwriter would not be required
or involved. It is also contemplated that initial data collection
and screening may be performed to some degree outside the system,
with some version of the results and information subsequently
entered into the system if necessary. It is also noted that these
initial steps normally require significant customization on a
company-by-company basis, beyond the customization which ca be
achieved through changes in the installation specific data
base.
As noted initial screening of the information preferably takes
place concurrently with information collection. Initial screening
allows for decisions to be made regarding a certain percentage of
the incoming cases. Currently, life insurance studies have shown
that five to nine percent of the incoming cases are "clean" cases
which can be disposed of (i.e., by issuing or declining to issue
coverage) on the basis of the initial screening process. The
percentage of cases which may be dealt with on this basis varies as
the characteristics of the product (i.e., type of policy, amount of
coverage requested, etc.) and the nature of the companies' business
vary.
After initial data collection, screening and entry, the system
determines whether or not additional underwriting is required. This
step is represented by block 42. If no additional underwriting is
required, appropriate entries in management information data base
28 are made in a management information reporting step, generally
represented by block 44 of FIG. 3. The information reported and
stored in this step allows for evaluation of how efficiently the
system deals with various types of cases and provides a statistical
base from which improvements and refinements in the system can be
made. Use of this information may be made internally (for example,
to automatically change or update the installation data base) or,
alternatively, the information may be transferred out of the system
for external administrative processing. In addition to allowing for
modification of the system, the information collected in the
reporting step provides administrators and management with trend
information which may be useful in strategic decision making.
If the system determines that more underwriting is required for a
particular case, the program proceeds to the initial underwriting
step which is generally represented in FIG. 3 by block 46. Initial
underwriting analyzes cases by considering financial, medical and
non-medical factors, or "impairments" and their interactions to
define underwriting problems requiring further underwriting action.
Initial underwriting also determines if additional information is
required to underwrite a particular case (decision block 48) and,
if so, preferably generates requests for the additional information
(block 50). Such additional information and requirements may
include (without limitation) medical examinations, test reports,
financial statements, and public records (e.g., motor vehicle
reports).
The financial element of initial underwriting preferably
establishes or evaluates a number of items, such as the
following:
a. the age group of the proposed insured (e.g., juvenile, young
adult, adult, elderly);
b. the employment status of the proposed insured;
c. the insurable interest of the proposed beneficiary;
d. the relationship of the proposed policy owner to the proposed
insured;
e. the purpose of the insurance (e.g., personal, charity, business
related, etc.); and
f. the appropriateness of additional benefits, such as accidental
death benefits, waiver of premiums and guaranteed insurability
riders.
In addition, the financial element defines financial problems in
terms of the financial information contained in underwriting
knowledge base 24, and identifies any additional financial
information or data required for further underwriting action.
The non-medical element of initial underwriting preferably:
a. identifies non-medical problems from the information in
application data base 20 and defines the nature of the non-medical
problems;
b. determines the weights (debits or credits) associated with the
non-medical problems using data from application data base 20
correlated to the non-medical information contained in underwriting
knowledge base 24;
c. identifies non-medical problems requiring additional
underwriting action which must be subsequently addressed by an
underwriter; and
d. identifies any additional information required if further
non-medical underwriting action is merited and preferably generates
requests for the additional information.
The medical element of initial underwriting will preferably:
a. define medical problems from the applicant's health complaints,
symptoms, use of medications, history of medical consultations,
surgeries, tests, etc.;
b. define medical problems from the applicant's medical history or
family history of specified illnesses;
c. classify the severity of medical problems according to severity
groups;
d. evaluate basic medical test results for the existence of
possible health problems (e.g., evaluate ECG, blood pressure, heart
rate, blood tests, urine nicotine, etc.);
e. determine the need for further medical information from the
severity of the medical problems defined, the applicant's age,
timing of the problems, amounts of coverage requested, etc.;
f. establish links or matches, if possible, between the medical
problems identified and specific impairments in underwriting
knowledge base 24; Note--establishment of a proper match cannot
always be done automatically by the system in the initial
underwriting step, and may require underwriter intervention later
in the process, as will be discussed more fully below;
g. determine the weights to be assigned to the medical problems
which are successfully matched to medical impairments in
underwriting knowledge base 24; and
h. identify, and preferably request, additional information
required for further medical underwriting.
The financial, non-medical, and medical problems (and their
interrelationships) identified as requiring additional underwriting
action in the initial underwriting step are stored for further
action by a skilled underwriter. In addition, any problems which
are identified, but which are not classifiable as financial,
non-medical, or medical problems, will also be stored for further
attention by the underwriter.
When it has been established that additional underwriting is
required (i.e., at least some problems remain unresolved after the
initial screening step), and initial underwriting has occurred to
further define the problems and to identify and request any
additional information which may be required to resolve the
problems, the case is assigned to an underwriter for resolution.
This step is represented by block 52 in FIG. 3. Cases are assigned
to an underwriter on the basis of underwriter availability (e.g.,
cases are not assigned to an underwriter who is on vacation), level
of experience or skill, workload, and any of a number of marketing
factors, such as geographical or office location of the
underwriter, type of product (policy) requested, and amount of
policy. Once assigned, the case will appear in the "in tray" of the
designated underwriter. The "in tray" refers to a list of cases
within the system which are awaiting underwriting action by the
selected underwriter.
Following assignment of the underwriter, the system stores relevant
information (e.g., the identity of the selected underwriter and
information concerning the status of the case) in the management
information data base (block 44).
FIG. 4 shows a flow chart which illustrates the process of
resolving or underwriting the problems identified in the course of
initial underwriting. After a case has been assigned to a
designated underwriter, in accordance with the above discussion
relating to FIG. 3, and the selected underwriter logs onto the
system (after entering the appropriate password and satisfying
other applicable security measures), the underwriter selects a case
to be underwritten. This procedure is generally represented by
block 54 in FIG. 4. It is presently contemplated that the
underwriter to which cases will be assigned by the system is a
relatively highly skilled individual, and is not likely to be the
same individual who will operate the system through the data
collection, screening and entry process and through initial
underwriting. However, in certain circumstances, it may be useful
or desirable for a single individual, having the requisite level of
skill, to complete the entire process as illustrated in both FIGS.
3 and 4. It should also be clearly understood that use of the term
"underwriter" in this application does not necessarily restrict the
use or value of the present system to those presently recognized as
"underwriters" in the insurance industry of today. While such
individuals will surely benefit from the present system, the
benefits and advantages offered by the system in the underwriting
process may very well expand or otherwise change the current
definition of the term "underwriter" such that individuals who
would not necessarily be deemed underwriters in the present
industry may be able to function in an underwriting capacity with
the aid of the present system. Accordingly, use of the term
"underwriter" in the present application should not be construed to
be limiting in any way to the applicability or scope of the present
invention.
After logging on to the system, the selected underwriter is greeted
by a menu of options which preferably include the following system
capabilities:
1. Examine or update application data base 20;
2. Review underwriting knowledge base 24;
3. Underwrite the case.
The process of selecting the desired option is represented by block
56 of FIG. 4, and the individual options listed are represented by
blocks 58, 60 and 62, respectively.
With reference to block 58 of FIG. 4, application data base 20
contains all of the elements of information relating to the
potentially insurable risk which are necessary to underwrite the
case. The underwriter is allowed to examine and review the
information in application data base 20, and has the capability of
updating the information as necessary for further underwriting of
the case. These capabilities are used to continually update a case
as new or expanded information is received. Upon reviewing the
information in application data base 20 relating to the subject
case, the assigned underwriter may elect to transfer the case to
other consulting underwriters or medical directors. If this option
is exercised, the case responsibility is transferred to the
receiving underwriter/ medical director for disposition or
reassignment, and the management information data base is
subsequently updated accordingly.
Once the decision has been made to underwrite a case, the
underwriter prepares by first selecting the case to be underwritten
from the "in tray" of cases awaiting underwriting action. These
cases have basic identification information that will allow the
underwriter to prioritize the assigned workload for a given period
of time. After examining or updating application data base 20, the
underwriter proceeds, if necessary, through the process of
preparing for actual underwriting, which is generally represented
by block 64 in FIG. 4. The process represented by block 64 is
illustrated as a separate subroutine in FIG. 5. With reference to
FIG. 5, the selected case is first displayed for underwriter review
of the application data, the problems identified by the initial
underwriting process, and the additional requirements or
information requested or recommended by initial underwriting. This
process is represented by block 66 in FIG. 5.
As a separate step in the process at this point, the system
provides for a review by the underwriter of the applicable
requirements (block 67). As used herein, the term "requirements"
means those elements of information such as electrocardiograms,
blood test and urinalysis results, medical records, financial
statements, consumer investigative reports, motor vehicle reports,
and other relevant information not available from the application
data which should normally be considered to come to a decision
regarding the underwriting of a particular problem. In addition to
reviewing applicable requirements relating to the case at hand, the
underwriter is given the opportunity to waive certain requirements
or to request additional requirements as deemed appropriate for the
particular case, and as allowed by the system.
The system will attempt to match or correlate the problems in
application data base 20 with specific impairments listed in an
impairment index of underwriting knowledge base 24 (block 68). This
will normally be achieved if there is an exact match of the problem
description in application data base 20 with an impairment in the
impairment index of underwriting knowledge base 24. Examples of
problems in application data base 20 which may be identified by the
system and matched to impairments in the impairment index of
underwriting knowledge base 24 are:
______________________________________ Problem Impairment
______________________________________ 1. Heart Attack Myocardial
Infection 2. Blood Pressure Blood Pressure 3. Duodenal Ulcer Peptic
Ulcer Disease 4. Kidney Stone Stones (Calculi) Urinary Tract 5.
Syphilis Sexually Transmitted Diseases 6. Arthritis Arthritis 7.
Depression Affective Disorders 8. Seizure Disorder Epilepsy 9.
Scuba Diving Scuba Diving 10. Motorcycle Racing Vehicle Racing
______________________________________
If all problems identified have been successfully matched to an
impairment (block 70) and the underwriter agrees (block 72) with
the match designated by the system, processing may continue. If a
match is not achieved, or if a match is achieved but the
underwriter disagrees with the match, the underwriter may proceed
in one of two ways, as represented by decision block 74. First, if
the underwriter does not know or is unsure of what impairment to
underwrite, and needs help in matching the subject problem to an
impairment in the impairment index, the underwriter may initiate an
information interpretation process (block 76). This process may
itself be an expert module whose purpose is to evaluate the
information contained in application data base 20, determine the
specific impairment to underwrite for a particular problem (e.g., a
medical abnormality identified in the application or a subsequent
medical exam), and guide the underwriter to the appropriate expert
module or section of underwriting data base 24 to underwrite that
impairment. In this process, basic applicant data such as sex, age,
height, weight, and the subject problem or impairment are combined
with other data from underwriting knowledge base 24, such as
symptoms, medical problems, medications used for particular
impairments, laboratory test standards, other related impairments,
and primary body functions affected. This information is evaluated
by the information interpretation expert module which functions in
the same manner as an expert diagnostic tool and is based on
expertise which would normally be available only from highly
skilled professionals. After evaluating this information, the
information interpretation expert module makes a recommendation as
to the most likely impairment(s) to underwrite. The underwriter is
then prompted for agreement or disagreement with the subject
recommendations (block 78).
If the underwriter does not agree with the selection of impairments
recommended by the information interpretation expert module, or if
the underwriter feels that a proper match can be achieved without
the aid of information interpretation, the underwriter is given an
opportunity to manually select an impairment from the impairment
index (block 80). This manual selection process may be facilitated
by providing the underwriter with the ability to perform a key word
or partial key word search of the impairment index. In any event,
it is not required that the system or the underwriter achieve a
match between each problem identified and an impairment in the
impairment index. Two possible outcomes result from an inability to
achieve a match:
a. the problem/impairment is relatively obscure and does not exist
in underwriting knowledge base 24. In this case, the impairment is
identified as not being in underwriting knowledge base 24 which
indicates to the system that this problem will be underwritten from
the experience of underwriter without the benefit of information
from underwriting knowledge base 24; or
b. the problem/impairment is left unmatched until additional
information is obtained. In this case, a final underwriting action
cannot be reached without the additional information. However, the
underwriting process is allowed to proceed for all matched
problems/impairments, without regard to the unmatched
problems/impairments. The unmatched problems/impairments may
ultimately be referred to appropriately skilled personnel (e.g.,
the medical director) for special handling and evaluation.
At this point, the application is ready for actual underwriting.
However, actual underwriting need not be done at this time. The
underwriter is given the option to exit the subroutine illustrated
in FIG. 5, or to proceed with selection and review of a different
case (block 82). When a decision is made to exit the subroutine,
the underwriter is prompted to affirmatively commit any changes
made to application data base 20 (block 84). Upon exiting the
subroutine of FIG. 5, the system optionally makes appropriate
entries in the management information data base (block 86), and the
underwriter may continue with the underwriting process (block
88).
The second of the options provided to the underwriter by the system
illustrated by the flow chart of FIG. 4 is that of reviewing
underwriting knowledge base 24 (block 60). As previously noted, the
system of the present invention allows the underwriter to reference
any of the textual material contained in underwriting knowledge
base 24 for educational or training purposes, or for other reasons.
The expert systems or modules within underwriting data base 24 can
also be executed for whatever benefits the underwriter might derive
therefrom.
Block 62 represents the third option provided to the underwriter.
That option is to proceed with actual underwriting of a case. In
the underwriting process as completed by the system of the present
invention to this point, each problem in application data base 20
which was identified in initial underwriting will be matched
(assuming that a match exists) to a corresponding impairment in
underwriting knowledge base 24. Each impairment on underwriting
knowledge base 24 is associated with textual information on the
knowledge base which describes the underwriting process as it
relates to that impairment. In addition, a particular impairment
may have a programmed knowledge base or expert module associated
therewith. The preferred system priority in completing the
underwriting process is: (1) use an expert module, when available,
to underwrite an impairment; (2) use the textual description of the
underwriting process in the knowledge base to underwrite an
impairment for which an expert module does not exist; and (3) allow
the underwriter the option to underwrite an impairment for which
neither an expert module nor a textual description of the
underwriting process exists The third alternative should occur only
when the impairment is obscure and is not documented on
underwriting knowledge base 24.
Referring now to FIG. 6, each problem in a particular case is
considered on an individual basis. Underwriting knowledge base 24
is first checked for the existence of an expert module (block 90).
If an expert module is available, it is used for underwriting the
subject problem unless the underwriter is rated as an expert
underwriter with regard to the subject problem, in which case the
system provides the underwriter an option to override the expert
module (block 92). If the underwriter cannot override the expert
module, or if a qualified underwriter chooses to use the expert
module to underwrite the problem (block 94), the system proceeds
with underwriting using the expert module (block 96). For purposes
of illustration, an expert module used when the initial
underwriting process indicates that the applicant participates in
mountain climbing activities is illustrated by the flow charts of
FIGS. 8-10. Referring to FIG. 8, the expert module first determines
whether the proposed insured is ratable for a medical impairment.
If so, the system recommends that coverage be declined, pending
submission of the case for special consideration. If the proposed
insured is not ratable for a medical impairment, the system
determines whether the proposed insured is ratable for alcohol or
illicit drug use, or a relevant driving history. If so, the system
recommends that coverage be declined. If not, the system inquires
as to where the proposed insured intends to climb. If unknown, the
system requests that this information be obtained via a mountain
climbing questionnaire. If climbing is to be done in locations
other than North America, coverage is declined If climbing is to be
done in the U.S.A. only, the system inquires as to how long the
proposed insured has been mountain climbing. If unknown, use of the
mountain climbing questionnaire to obtain this information is
recommended. If the proposed insured has been climbing for less
than two years, a rating for mountain climbing of, for example,
$3.50 per $1,000 requested coverage is recommended. If the proposed
insured has been climbing for more than two years, no additional
premium related to mountain climbing is required After making the
latter two determinations, the system branches to FIG. 10 wherein
it is determined if the proposed insured climbs more than six times
per year. If not, the previously determined rating is displayed on
the basic rating screen. If yes, an additional factor of $2.50 per
$1,000 is added to the previous rating for mountain climbing, prior
to display of the basic rating screen.
Referring back to FIG. 8, if the proposed insured intends to climb
in Canada and Alaska, the system again determines how long the
proposed insured has been mountain climbing. If unknown, this
information is requested via the questionnaire. If less than two
years, coverage is declined. If greater than two years, the program
branches to FIG. 9, wherein it is determined if the proposed
insured has climbed in Alaska. If unknown, a rating for mountain
climbing of $7.50 per $1,000 is assigned and printed on the basic
rating screen, along with a message indicating that this rating may
be decreased pending receipt of the unknown information. If yes, a
rating for mountain climbing of $5.00 per $1,000 is assigned. If
no, a rating for mountain climbing of $7.50 per $1,000 is assigned.
After assignment of each of these ratings, the program branches to
the loop of FIG. 10 for final determination of the basic mountain
climbing rating and display of the rating on the basic rating
screen.
Similar, although usually more complex, expert modules exist for
other medical and non-medical impairments in knowledge base 24. As
illustrated by the system of FIGS. 8-10, the expert modules use
programmed reasoning to determine the weights to be assigned to the
subject problem. This approach allows even a relatively
inexperienced underwriter to uniformly evaluate problems in a wide
variety of areas, and to arrive at a determination as to how such
problems should be treated in the underwriting process.
If an expert module does not exist but textual information for the
subject impairment does exist, then the textual information on
underwriting knowledge base 24 is preferably used by the
underwriter in determining the weights to be assigned for a
particular problem. When textual information on the subject
impairment is not available, the underwriter will underwrite the
problem in the same manner, except that no textual information will
be available from the system for the underwriter's reference. The
quality of ratings assigned for these types of problems is
determined by the relative expertise of the underwriter.
Accordingly, management may optionally allow only expert
underwriters to underwrite problems for which no information on
corresponding impairments exists in underwriting knowledge base
24.
To briefly summarize, if an expert module does not exist for a
particular problem, the system determines whether or not textual
information regarding the corresponding impairment exists in
underwriting knowledge base 24 (block 98). If not, the problem
falls into the "relatively obscure" category and is underwritten
(or referred to others for further consideration) without the
benefit of underwriting knowledge base 24 (block 100). If the
knowledge base does contain textual information dealing with the
problem and its corresponding impairment, this textual information
is displayed for use by the underwriter in determining the weights
to be assigned to the problem (block 102). Although in many cases
this approach to underwriting may be relatively straight forward, a
greater degree of subjectivity is often involved.
UNDERWRITING USING INFORMATION DISPLAY
For medical problems which are to be underwritten by reference to
textual information in underwriting data base 24 (i.e., information
display), the underwriter is first offered the opportunity to
review information about the basic body systems affected by the
problem. This information is typically in the form of an
introduction to the body systems, an outline (flow chart) of
approaches to underwriting various impairments associated with the
body systems, and medications used to treat various impairments of
the subject body systems. For each problem/impairment identified,
including non-medical/avocational and financial problems, the
underwriter may review the textual information in underwriting data
base 24 which relates to and describes the approach to underwriting
the particular problem. This text is normally in the form of a
general introduction to the impairment, a description of key data
and strategies used for underwriting the subject problem,
suggestions as to any additional information that should be
obtained to adequately underwrite the case, and the specific
underwriting action recommended, including any other additional
factors which should be considered. The text normally identifies
specific weights (i.e., debits or credits) which are to be assigned
to the specific problem. In some cases, an extra premium (either
temporary or permanent) may be suggested in lieu of, or in addition
to, the suggested weights.
After reviewing the textual information displayed, including the
weights identified for the problem and any extra premiums
suggested, the underwriter is prompted to assign the weights and/or
premiums to the problem in question. It should be noted that the
underwriter also has the option of leaving underwriting of a
particular problem "unresolved" if additional information,
consultations, or referrals are deemed necessary, as well as the
option of declining coverage on the basis of any given problem.
UNDERWRITING USING EXPERT MODULE
Expert modules are programmed for many of the impairments in the
underwriting knowledge base. These modules incorporate the same
data and underwriting strategies present in the textual information
in underwriting knowledge base 24, as derived from the underwriting
manuals and overall expertise of the system developers. In addition
to these data and strategies, logic is developed to further
prioritize the sequence of questions employed to resolve a
particular problem. These programs are developed in such a way that
they produce an underwriting decision (i.e., an assignment of
debits/credits for the problem under consideration, plus any extra
premiums which may be applicable) using the least amount of
information possible. Furthermore, the data requested is sought
from the information in application data base 20, preferably
without requiring input from the underwriter, and secondly from the
underwriter in an interactive mode. Other data bases or sources of
information may also be consulted for the needed data. This means
that different sequences of data requests might occur in connection
with the same problem, depending upon the amount of data captured
in the process of data collection, entry and screening. In summary,
assuming that adequate and appropriate information has been
collected and stored in the system, a rating or weight for each
problem is determined and assigned by the expert module using
information contained in application data base 20 and/or input from
the underwriter in response to queries put forth by the expert
module, in accordance with the underwriting philosophy programmed
into the system. If adequate information is not available,
appropriate requests are generated to obtain additional
information. This approach results in efficient, high quality,
uniform underwriting of like problems on a case-to-case basis.
UNDERWRITING WITHOUT THE UNDERWRITING KNOWLEDGE BASE
When no expert module and no information display module exists
(i.e., the problem/impairment is not found in underwriting
knowledge base 24), the problem will normally be left "unresolved"
and the next problem will be taken up, unless the underwriter is
rated as an "expert" in the subject area of concern Expert
underwriters will be queried for the type of action to take (e.g.,
decline the case, leave the problem "unresolved", or take an
underwriting action). The decision to take an underwriting action
proceeds on the same basis as underwriting using the information
display (i.e., weights are assigned, premiums (if appropriate) are
accessed and the numbers of years they apply are specified,
etc.).
After a particular problem has been underwritten in one of the
three fashions described above, the system determines whether or
not other problems in the subject application remain to be
underwritten (block 104). If so, the remaining problems are taken
in turn. If not, the system proceeds to an optional profiling
process represented by block 106.
When no other problems remain to be underwritten, user adopted
statistical profiles may be used to adjust one or more of the
weights assigned to selected problems on the basis of previously
stored statistical profiles relating to the selected problems. A
profile is developed when a statistically proven correlation
affecting the final rating or weight applicable to a particular
problem has been found to exist, and the subject correlation is not
reflected in the treatment of the impairment in underwriting data
base 24. For example, a cardiovascular profile has been developed
which adjusts the overall mortality risk on the basis of factors
shown by studies to be predictive of premature mortality from
arteriosclerotic heart disease (i.e., factors such as high
cholesterol and high blood pressure). System switches are available
which allow management, as a matter of policy, to either use or
bypass profiles in the system. Additional profiles can be added as
statistical correlations warrant.
After the individual weights are assigned to each problem, and
after the weights are adjusted according to any applicable
statistical profiles, the weights must be combined to determine an
overall risk assessment for the case. There are several ways in
which this can be done. For example, one method is to compare the
individual weights to a standard mortality rating to determine a
mortality ratio for each problem. The individual ratios can then be
combined to determine an overall mortality ratio for the
individual. In determining the final ratio, it has been found that
certain problems or impairments interact to produce positive or
negative effects that are not truly represented by a simple
additive combination. Block 108 of FIG. 6 represents the process of
combining the weights or ratios assigned to individual problems to
determine a final ratio or rating. The process of block 108
includes the process of identifying combinations of problems which
represent more or less severe impairments than would result if the
subject problems occurred individually, and adding (or subtracting)
an extra "combination" weight to the total. For example, if an
applicant has hypertension (problem A) and is a diabetic (Problem
B), individual weights or ratios would be assigned for problem A
and problem B, in accordance with the methodology described above,
and then the system at block 108 would assign an additional weight
or ratio upon recognizing the existence of problems A and B in
combination.
When the combined weight or mortality ratio has been determined,
this figure is converted into a risk classification (block 110).
This process permits the underwriter to correlate the expected
mortality of the proposed insured (i.e., the mortality ratio), with
actuarial analysis and pricing assumptions made during development
of particular products (i.e., types of insurance plans). Proper
assignment of risk classifications to each individual case insures
the eventual billing of premiums in appropriate amounts to assure
profitability at the levels expected from the actuarial pricing
assumptions employed. This becomes increasingly important as
expanding portfolios of products are underwritten, some of which
may have relatively large differences in mortality assumptions
built into the product designs.
A simplified example of a mortality plan conversion table (block
112) which may be used in converting the combined weight or
mortality ratio to a risk classification appears as follows:
______________________________________ MORTALITY PLAN CONVERSION
TABLE Plan of Insurance Identifier X(8) Rating or Risk
Classification Mortality Ratio
______________________________________ Preferred Standard 75%
Standard 100% Table A 125% Table B 150% " 175% " 200% " 225% " 250%
" 275% Table H 300% ______________________________________
Use of such a table may be correlated with classes of mortality,
such as aggregate mortality versus distinctive subgroup mortality
(i.e., smokers, non-smokers, etc.), and with product benefits for
the individual applicant. The mortality plan conversion table is
preferably part of installation specific data base 22.
As noted above, there are other methods, in addition to the one
just described, which may be used to determine the overall risk
assessment. These include use of the excess death rate (EDR) or use
of an exponential function.
After mortality plan conversion is complete, the system has
determined a risk classification which is appropriate in view of
the total mortality rating or ratio of the applicant and the
particular plan of insurance selected. The underwriter now exits
the underwriting subroutine represented by block 62 of FIG. 4, and
may elect to perform a business analysis subroutine represented by
block 63.
Upon entry into the business analysis subroutine (FIG. 7), the
system first determines whether or not the assigned underwriter is
deemed to have sufficient expertise to override the rating or risk
of classification just arrived at by the system (block 114). If
yes, the underwriter is given an option to override the determined
rating (block 116). If not, or if a qualified underwriter chooses
not to override the rating, the system provides the underwriter an
option to transfer the case for consultation to another underwriter
or to a medical director (block 118). When the underwriter is not
rated an expert underwriter but wants to override the system's
rating, the application must be transferred to an expert rated
underwriter (block 120). Once responsibility for the application
has been transferred, the newly assigned expert underwriter may
then override the system, if the situation warrants. When a
decision is made to override the system, items such as amount of
insurance, risk classification, extra premiums assessed, and number
of years extra premiums apply may be modified. When a case is
overridden, the reasons underlying the change must be documented
when the change is made (block 122). After each proposed insured on
a given application has been evaluated in this manner, a final
underwriting action for the policy is determined.
If an expert underwriter decides to override the system determined
rating, the option to determine the economic impact of a rating
change is offered (block 124). If the underwriter decides to
exercise this option, the system proceeds to a financial analysis
generally represented by block 126 of FIG. 7. The system of the
present invention preferably uses techniques of decision analysis
to assess the economic impact on expected profitability of proposed
changes in the possible courses of action for each individual
application.
Decision analysis is a quantitative technique for making decisions
about complex problems in situations of uncertainty. Use of
decision analysis techniques normally involves five steps: (1)
determining the possible options; (2) determining the probabilities
of occurrence associated with each of the options; (3) quantifying
the results of each of the options; (4) calculating the value of
each of the options; and (5) determining the best option to select
for a given situation and evaluating the effects of changes in the
situation upon given options. In underwriting life insurance, the
options available are normally those with which an underwriter
deals on an every day basis, i.e., offer standard coverage, offer
modified (substandard) coverage, or decline to offer coverage. The
applicable probabilities are those relating to early mortality,
given the existence of a particular problem, such as an abnormal
test result secondary to any one of a number of underlYing causes.
The result of each option is the profit or loss which the insurance
company will experience if that option is exercised. The "best"
option is normally the one which will result in a maximization of
profit.
A hypothetical example of the application of decision analysis in
the system of the present invention involves a fifty-five-year-old
applicant who is applying for $100,000 insurance coverage. The
applicant is without physical complaints, but has an abnormality (a
solitary pulmonary nodule) which was revealed on a routine chest
x-ray. For clinical and insurability purposes, the disease with
which one would be most concerned is lung cancer. There are no
previous x-rays available for comparison. A pulmonary consultant
has examined the applicant and recommended that surgery not be
performed at this time, but that a repeat x-ray be taken in several
months.
The possible options available to the underwriter (i.e., offer
standard coverage, decline coverage, offer rated or modified
coverage), and the possible results flowing from each option, are
illustrated in the decision tree of FIG. 11. To determine the
probabilities of each result, the clinical and insurance literature
must be consulted. At this point, the diagnosis is not clear.
Although there is little information in the insurance literature
regarding this impairment, there is a considerable amount of
quantitative clinical information available on the problem of
solitary pulmonary modules. In the clinical literature, a
quantitative system by which the probability of malignancy can be
estimated utilizing Bayes Theorem of Probabilities has been
developed. Using this system, the probability of the existence of
cancer in this particular case is determined to be 86% (0.86).
To complete the analysis, additional probabilities must be supplied
or estimated. For example, the best possible two-year survival rate
for lung cancer is 46% (0.46). Since the applicant is currently
asymptomatic and not under treatment of a doctor, the probability
of acceptance of a rated policy is estimated to be 50% (0.50).
These probabilities (P) and the associated alternative
probabilities (1-P) are identified with the appropriate branches of
the decision tree, as shown in FIG. 12.
The results of each outcome, in terms of profit or loss to the
company, may be quantified as follows:
1. A profit of $490 will be realized if a $100,000 standard policy
is offered and accepted and mortality is normal;
2. A loss of $100,000 will result if a policy is offered and
accepted, and there is early mortality;
3. A loss of $10.00 (for processing) will result if coverage is
declined (i.e., a policy is offered and declined, or not offered);
and
4. A profit of $889.00 will result if a rated policy is offered and
accepted, and mortality is normal.
FIG. 12 shows the decision tree of FIG. 11 with the probabilities
and profit and loss figures shown on the appropriate branches. The
values of each option, in terms of profit or loss to the company,
can then be determined by the following calculations: ##EQU1## From
these calculations, it is apparent that the appropriate option to
select is option B (i.e., decline to offer coverage).
Use of this technique to evaluate "close" cases or to allow the
underwriter to assess the impact of a contemplated rating change,
will allow the individual underwriter and the company (through
appropriate entries made in the management information data base)
to determine the impact of such cases and changes on the company's
profitability. These techniques can also lead to more uniform and
rational decision making by individual underwriters and groups of
underwriters.
After exiting the business analysis subroutine (block 63 of FIG.
4), the program records appropriate information relating to the
subject application and underwriter in the management information
data base (block 86) making the information available for
subsequent administrative processing. The system then offers the
underwriter the option to select and underwrite another case or to
exit the system (block 88).
From the preceding description of the preferred embodiment, it is
evident that the objects of the invention are attained. As
previously noted, the invention has been described and illustrated
in detail by reference to a particularly preferred embodiment
adapted for use in the field of life insurance. Although the
present invention does offer particular advantages in this field,
it is felt that adaptation and application of the method and
apparatus of the present invention to other fields will also be
advantageous. Accordingly, the spirit and scope of this invention
are not to be limited by the details of the preferred embodiment
described above, but rather by the terms of the appended claims.
##SPC1##
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